Some foreign-owned firms "strip" US profit to avoid taxes

November 28, 2007
Some foreign-owned firms "strip" US profit to avoid taxes

WASHINGTON, Nov 28 (Reuters) - Foreign-controlled U.S. companies that move their headquarters overseas are rampantly "stripping" earnings to avoid paying U.S. corporate income taxes, according to a new U.S. Treasury Department study released on Wednesday.

The practice of earnings stripping by foreign-controlled firms involves adding excessive debt or other costs to a U.S. subsidiary to reduce local profits and avoid tax liabilities.